Finding 32952 (2022-001)

Material Weakness

Requirement

Questioned Costs

Year

2022

Accepted

2023-01-11

Audit: 34223

Organization: Center for Inclusive Child Care (MN)

Auditor: Mahoney Ulbrich Christiansen & Russ PA

AI Summary

Core Issue: CICC restated financial statements due to two invoices from 2021 recorded in 2022, indicating a lack of effective internal controls.
Impacted Requirements: The failure to record expenses timely led to a material adjustment, affecting the reliability of financial reporting.
Recommended Follow-Up: Implement a tracking process for expenses and conduct a year-end review to ensure all incurred expenses are recorded and eligible for reimbursement.

Finding Text

SECTION II ? FINDINGS ? FINANCIAL STATEMENTS AUDIT 2022-001 ? Audit Adjustments Material weakness Criteria - Effective internal controls are designed to provide reasonable assurance regarding, amongst other things, the reliability of financial reporting. This means they should help CICC avoid material restatements of the financial statements. Condition - The financial statements for the year ended June 30, 2021, were restated during the current year to record two invoices for services provided in 2021 but not recorded until 2022. Both invoices were fully reimbursable by a government grant. Cause - The invoices were not received in a timely fashion by CICC and, once received, were recorded in the year in which they were paid. Effect - The invoices were not properly recorded in 2021, therefore a material prior period adjustment was made to correct in 2022. In addition, the related revenue and receivable for a government grant were not recorded. Recommendation - CICC should develop a process to track expenses incurred. Before the accounting records are closed for the year, a review should be performed to ensure expenses incurred prior to year-end are captured in the accounting records. Any expenses noted that required accrual should be reviewed for reimbursement eligibility and, if applicable, the related revenue should be accrued. Auditee?s comments and response - Management will review invoices in detail to ensure that they are recorded in the correct period. Responsible party for corrective action: Amy Petersen, Finance Manager

Corrective Action Plan

SECTION II - FINDINGS AND QUESTIONED COSTS - FINANCIAL STATEMENTS AUDIT Name of Contact person ? Amy Petersen, Finance Manager Corrective action ? CICC will develop a process to track expenses incurred. Before the accounting records are closed for the year, a review should be performed to ensure expenses incurred prior to year-end are captured in the accounting records. Any expenses noted that required accrual will be reviewed for reimbursement eligibility and, if applicable, the related revenue will be accrued. Proposed completion date ? Management and the Board of Directors will implement the above procedures immediately.

Other Findings in this Audit

609394 2022-001

Material Weakness

Programs in Audit

ALN	Program Name	Expenditures
93.575	Child Care and Development Block Grant	$1.78M